Significant numbers of consumers have become reliant on using high cost credit and many would continue to do so even if their repayments were a third higher, research has shown.
The Office of Fair Trading said the majority of people understood which products, such as pay-day loans, home credit and pawn broking were expensive ways to borrow, but many continued to use them because of the speed at which they could access money.
The trading watchdog also found that many people using high cost credit did not search the market for other products or providers, and often left themselves only a few days in which to assess their options.
Around 65 per cent of people said they thought home credit offered fairly or very poor value, with 63 per cent and 61 per cent respectively feeling the same way
about pawn broker loans and unauthorised overdrafts.
But despite this many people said they were dependent on home credit, with 27 per cent having more than one loan outstanding at any one time,
while 26 per cent said they used home credit on a continuous basis.
Up to 36 per cent of users of certain high cost credit products also said they would continue to use them even if interest rates were raised to make their monthly repayments a third higher.
The study was carried out as part of the OFT's review of the £35 billion high cost credit market, which is typically used by people on low incomes who cannot access mainstream credit and who are borrowing small sums for a short period of time.
